Dunlop Ambattur unit to resume operations in 6 months

May need Rs 15-crore investment

Dunlop India's dormant tyre factory in Ambattur might need an investment of about Rs 15 crore to resume production activities and is expected to start operations in six months, said Pawan Kumar Ruia, whose group recently bought the company.

Ruia, chairman of Jessop & Co, visited the Ambattur factory on Wednesday, after his group recently bought controlling stakes in Dunlop India, Falcon Tyres and Indian Tyre and Rubber from the Manu Chhabria group for about Rs 200 crore.

The Dunlop factory has been closed since mid-2001. Ruia said that the resumption would be full-fledged. Dunlop's Ambattur factory has a capacity of 46,000 tyres a month, and can produce commercial vehicle, car and tractor tyres. Dunlop also has a factory in West Bengal, which makes aviation tyres.

The position in Dunlop's Ambattur factory was better than that in West Bengal unit, felt Ruia. This is on account of a memorandum of understanding (MoU) the erstwhile management had reached with the Dunlop Factory Employees Union.

The validity of the MoU ended last December. Ruia said that discussions would have to be held with the Union to extend the MoU. Ruia would also have to reach an agreement with the company's creditors in the run-up to resumption. Dunlop India has a book liability of about Rs 600 crore. The asset value is about Rs 800 crore.

Even though Dunlop India's production facilities have been dormant for some time, Falcon Tyres makes and markets some tyres under the Dunlop brand name. Ruia said that Falcon outsourced some items, and Dunlop's Ambattur facility could be used to source those items.

The upbeat prospects for the automotive industry meant that Dunlop India would enter a market with healthy demand, he felt. Ruia forecast that in the first full year of operations, Dunlop would register a turnover of Rs 300 crore. By the fifth year, the turnover would go up to Rs 1,000 crore, he added.

The Dunlop brand covers goods other tyres. The brand covers items of personal consumption such as apparel, tennis rackets and balls. Ruia said that it had come to his notice that the brand had been used without permission. "I will not permit that," he stated.

The road ahead

Following the closure of Dunlop's Ambattur factory in mid-2001, some of the workers drifted into less lucrative alternative jobs. Some of the former workers visited the factory on Wednesday after they heard that the new owner would visit them.

There was a sense of pride in having worked for Dunlop, among the few workers who spoke to Business Standard. A view expressed often was that Dunlop was a name to reckon within the tyre industry earlier.

After a meeting with the representatives of the Dunlop Factory Employees Union, Pawan Kumar Ruia addressed the workers. Ruia's address centred around an early resumption of operations.

He also cautioned the workers that everyone associated with the company would have to make some sacrifices. He promised the workers that he would try to make sure that the sacrifices made by them would be less than that of other stakeholders.